Smokin’ Hot Tobacco Stock Picks: Analyst

Wednesday, 2 Mar 2011 | 1:36 PM ET

Despite the health effects and new regulations, many stocks in the tobacco sector are hitting new highs Wednesday. Philip Gorham, analyst at Morningstar, said the sector could continue rallying.

Smokin' Hot Tobacco Stocks
Despite the health effects and new regulations, many cigarette stocks are hitting new highs. But can an industry that everyone loves to hate keep smoking? CNBC's Brian Shactman discusses with Philip Gorham, Morningstar.

“[The rally] can last until manufacturers can no longer raise prices above the rate of consumption—and I don’t see that point coming any time soon,” Gorham told CNBC.

“We don’t see a kink in the demand curve quite yet.”

Gorham said his “best in class” picks include Philip Morris and Altria .

“But look out of Lorillard, ” he cautioned. “They’re risky, but we don’t think there will be much impact from the FDA investigation.”

Watch: CNBC original documentary 'Cigarette Wars' premieres Wednesday, March 2nd 9p ET. And don't forget to check out the special show page.

Scorecard—What He Said:

  • Gorham's Previous Appearance on CNBC (Feb. 4, 2011)

CNBC Slideshows:

CNBC Data Pages:


Where the Other Top Tobacco Stock Stands:

Reynolds American


Gorham does not own shares of PM, MO, LO, RAI or RTI.



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